Yelp doing more to cultivate trust

Joshua Brustein :
August 17, 2013

The Yelp Inc. logo is displayed in the window of a restaurant in New York, U.S., on Thursday, March 1, 2012. Yelp Inc., the site that lets users review everything from diners to dentists, is set to price it's IPO tonight and could potentially raise as much as $100 million, which would value the company at about $838 million. Photographer: Scott Eells/Bloomberg

If you build a business on user-generated restaurant reviews, you're going to spend a lot of time developing new ways to limit posts by shills and scammers.

Last week, Yelp laid out the latest step in its battle to keep its pages at least somewhat credible: a new round of "Consumer Alerts" that warn readers away from listings that seem suspiciously sunny.

In October, the San Francisco site flagged the pages of a handful of businesses it caught soliciting positive reviews on such sites as Craigslist and Freelancer. Since then, the company has started busting restaurants that trade discounts for positive reviews and watching for IP addresses that generate tons of glowing feedback.

Tagging offenders

If Yelp concludes that a restaurant is playing dirty, it adorns the offender's page with a scarlet letter of sorts. Those that scrub their listings and work themselves back into Yelp's good graces can get the alert taken down after 90 days.

So far, the company says, it's tagged more than 150 businesses, a sliver of its listings. The number of businesses flagged isn't just fewer than the number of dive bars listed in New York, it's fewer than the number of pet-related businesses in Honolulu.

Yelp concedes that its investigations are limited. The company says its alerts are designed to flag the most egregious offenders and scare would-be copycats. Yelp would be hard-pressed to hire enough people to police the whole site, which has fielded about 42 million reviews since its inception.

Instead, the company uses an algorithm to watch for suspicious patterns of behavior and relegates roughly 20 percent of its reviews to less-visible parts of the site. (The IP monitoring is another such automated tool, said a company representative.) Yelp's 108 million users supplement that system for free.

While Yelp doesn't break out how much it spends on combatting phony reviews, in regulatory filings it has described credibility maintenance as a major risk in its business model. The company has to worry about this from the other side, too; it regularly receives complaints about burying legitimate reviews caught in its algorithm's dragnet.

Review skepticism

But there are only so many people who still take online reviews seriously. In a report from Forrester this year, 46 percent of survey respondents said they trust consumer-written online reviews, while only 9 percent trust content written by brands themselves.

Search engine optimization firm Brightlocal, which has been surveying people for several years, has more optimistic numbers, reporting that almost 80 percent of people trust online reviews as much as they do personal recommendations. Brightlocal also found that almost 90 percent of people had used online reviews to find a business at least twice in the last year, with a majority reading two to six reviews before forming an opinion.

That's probably a good sign for Yelp, which has seen its revenue and gross profit grow by more than 65 percent during the last year. It's also one hell of a temptation for businesses to game the system.